SeaLink Travel surges 37pc on ASX debut

SeaLink began trading at $1.51 on the ASX on Wednesday morning after raising $16.5 million from investors, which at the issue price of $1.10 gave it a market capitalisation of $77 million.
Photo: Warren Hackshall

by
Simon Evans and Joyce Moullakis

Bankers are labelling 2013 the most favourable for local initial public offerings for at least three years, after ferry and tourism operator
SeaLink
Travel Group made a bumper debut on Wednesday and as the pipeline for new offerings becomes more congested.

SeaLink shot as much as 41 per cent higher than its $1.10 issue price in trading on Wednesday, mirroring a stellar debut by foreign exchange payments company
OzForex
last week.

He added that leading into the listing he wasn’t overly concerned about the impact the budgetary shutdown issues surrounding the US government and the resulting dampening effect on sharemarkets around the world might have on SeaLink.

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“Obviously we were aware of it, but we felt the fundamentals of the company and where it is headed are good and that’s the main consideration,’’ he said.

While the SeaLink IPO wasn’t large in dollar terms, it adds to positive sentiment surrounding the pipeline of offerings slated for the rest of the year, which may see at least another $3 billion raised. Nine Entertainment, credit business Veda and STAG Beef are among those on the runway for an IPO in the final months of 2013. The key will be the conversion rate from the pipeline to listing as investors wait to see whether the float rush eventuates. IPO candidate McAleese Transport has already postponed its raising.

Still, successful listings in recent months including
OzForex
,
Virtus Health
and insurance broker group
Steadfast
, appear to have outweighed what was a disastrous float for insurance comparison site
iSelect
.

The local market for floats had remained in the doldrums since the tainted floats of
Myer
Holdings and
Collins Foods
in 2010.

Bankers such as UBS co-head of equity markets Simon Cox are confident the deadlock between investors and vendors for IPOs “has been broken" this year.

“It really is as good as it has been for a very long time," he said. “It is being channelled down a pretty narrow funnel at quality industrials."

Mr Cox said taking into account new listings and offerings still in the pipeline, UBS likened 2013 to buoyant levels in 2007.

On Dealogic numbers, initial public offerings – including dual listings – total $US3.9 billion so far in 2013. That is the highest year-to-date total since $US4.7 billion in 2007.

A late flurry of floats in 2010, including QR National – now
Aurizon
– took the calendar year total to US$7.9 billion. The numbers, whichever way you cut them, are a big improvement.

Valuations and earnings multiples sought for IPOs such as OzForex and SeaLink have also highlighted the warming sentiment of investors.

“Good companies can get good valuations," in the current environment, Mr Cox added.

Ord Minnett’s head of corporate finance
Michael Hughes
, who worked on the SeaLink float alongside Taylor Collison, characterised the local market for floats as the most favourable since 2010.

He cautioned, however, that investors were being, “discerning and keen to understand whether business models and management quality are up to scratch".

“The sentiment has changed," Mr Hughes said. “People are being realistic but it’s not just an open cheque book, it [the offering] has to stack up."

Mr Ellison on Wednesday said SeaLink was benefiting from an increase in the number of visitors to Australia from Europe, while Chinese tourism numbers are rising strongly.

SeaLink runs the Captain Cook cruises business on Sydney Harbour, a ferry service to tourism hot spot Kangaroo Island in South Australia, and ferry services in Townsville in Queensland and Darwin in the Northern Territory.

Local long-only funds were said to have participated in the raising, including Perennial Investment Partners.

While the market is buzzing from recent floats, investors are still keeping a keen eye on vendors including private equity firms seeking to exit their portfolio companies.

Other IPO candidates such as Genworth Australia have had a number of false starts and may not pull the trigger on a raising until 2014. Plastic and industrial metal packaging company Pact Group, which investigated a trade sale last year and an IPO three years ago, is also a listing candidate.

Globally, large floats such as the UK’s Royal Mail and the upcoming IPO of Twitter are also satisfying investor demand for new issuance. Twitter has opted to list on the New York Stock Exchange, rather than the Nasdaq.